We do not think that the global economy is performing as badly as many believe. Indeed, our expectation is that growth in China this year is more likely to edge higher than collapse. With this in mind, we anticipate that the plunges in the prices of many risky assets will be reversed soon. For example, we forecast that equity markets in the developed and emerging world will post solid gains and that industrial commodities such as oil will recover. By contrast, we believe that increased appetite for risk and tighter US monetary policy than most foresee will take the shine off bonds and drive the dollar up against most developed, though not all emerging, market currencies.
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